Motley Fool recently waded through the ocean of possible investments and determined three stock ideas for investors looking for ways to make money during a recession.
The Fool explained that the three sectors (and top individual stock pick) “have either already demonstrated an ability to grow revenue in a recession or possess qualities that can actually help them benefit from a recession.”
The magic trio:
Auto-Parts Retailers: O'Reilly Automatic Inc. (NASDAQ:ORLY)
“There are two key trends that favor buying an auto-parts retailer like O'Reilly Automotive as a recession-proof stock:
- If the economy pulls back, consumers tend to hold off purchasing new cars. Because old cars need more servicing, it's usually good news for auto-parts retailers.
- Cars are becoming increasingly sophisticated, meaning "Do It For Me" (DIFM) is likely to grow faster than "Do It Yourself" (DIY) in future years. This is good for O'Reilly Automotive's dual-store (DIY and DIFM) model.”
Animal health: Zoetis Inc. (NYSE:ZTS)
“The second sector to look at is animal health, and in particular, the companion animal market. Livestock can be cyclical -- after all, commodity prices fluctuate considerably -- but recessions don't usually stop people from caring about their pets. It's not a foolproof argument, as economic slowdowns tend to cause people to visit veterinary practices a bit less, but the evidence is that animal health does well enough in a recession,” the Fool explained
Gold: SPDR Gold Shares (NYSEMKT:GLD) ETF
“Gold, or in this case, the SPDR Gold Shares ETF, is always touted as an anti-recessionary investment, but its importance is likely to increase should the global economy fall into a recession in future years. The rationale here is that the global economy is in uncharted territory with regard to current debt levels and recessions,” the Fool explained.
But just how likely is another recession? Depends on your perspective.
Former Reagan economic adviser David Stockman is standing by his warning for investors to sell all their stocks despite the market seemingly setting record highs every day.
"This eruption is meaningless. It's some robo machine trying to tag new highs," Stockman told CNBC.
"I see a recession coming down the pike in 2017. The stock market is going to go down and it's going to stay down long and hard because, for the first time in 25 years, there's nothing to bail it out," said Stockman, who was director of the Office of Management and Budget under President Ronald Reagan.
He predicts "an unprecedented fiscal bloodbath" resulting from the nearly $20 trillion worth of debt that the U.S. currently has on the books.
Stockman repeated his warning that Washington will be in chaos by June.
Stockman predicts:
- Ongoing disruptions from the Tea Party, which won’t allow additional deficit increases.
- Trump won’t be able to pass a bipartisan stimulus plan and fulfill his promise to repeal and replace Obamacare.
- Trump won’t be able to enact a meaningful tax cut or to develop a major infrastructure program.
- Eventual civil war within the GOP.
"So when the recession hits this summer, the Fed will be out of dry powder and fiscal policy will be paralyzed," concluded Stockman. "This time the market will crash and stay crashed."
Stockman once again advised savvy investors that gold and cash are your only safe investment options.
(Newsmax wire services contributed to this report).
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